Intel (INTC) CEO Craig Barrett has built much of the chip giant's strategy on convergence. He sees Intel chips extending from computers into loads of digital contraptions, from cameras to cell phones. Barrett has already notched some successes. By incorporating Wi-Fi capabilities into the Centrino laptop chip, it pushed dramatic growth of the entire Wi-Fi market.
The CEO recently discussed convergence in a phone interview with BusinessWeek's Heather Green. Following are edited excerpts of their conversation:
Q: We're seeing this collision of three industries. Is it happening because these three industries are mature and looking for new markets, or because there's an unusual confluence of events?
A: The confluence of events is more significant: People have been talking about convergence for 20 years, finally the world of communication is going digital. All of a sudden, we have computing and communication coming together. Standard digital architectures are appearing. As communications has gone digital, it has dragged in the last industry, consumer electronics. They're at last coming together
I don't think it's [the PC industry's] maturation. It's the technical evolution that's coming together, providing new opportunites for some companies and new challenges for others. The result is that it's tougher everyday to see a device that you can put in either pail.
Q: Will this really produce never-before-thought-of products and services, or will we see players across the three industries doing me-too products?
A: There will be exciting new products brought into the marketplace. It has to be technologies consumers find useful -- you have to distinguish good stuff from the techie stuff. Take Wi-Fi: People like it and want it. It's the advent of the digital home. This will all create innovative applications and technologies.
Q: How do you figure out things people want, instead of something that companies think they need?
A: The best way to look at untapped demand is to look at a couple of things that have been happening -- digital music being downloaded, whether [via] classic P2P [peer-to-peer networks] or download services. When you get 100 million users almost overnight, you know there's a demand that the application is filling. Digital cameras are another example of this. Everyone has a digital camera. Then combine those two point elements with the whole concept of the digital home: That I ought to be able to develop, exchange, and store my information at any time or any place.
Q: How does the role of Intel change?
A: In the past we dealt with the computing area. That was more-or-less distinct, and the communications was distinct and isolated. They're now converging, in some cases, on common architectures and solutions. Obvious evidence of this is the infrastructure convergence. Look at what companies like Lucent (LU) or Alcatel (ALA) or Siemens (SI) or Nortel (NT) are doing. They're moving more or less to common platforms, away from the proprietary infrastructures they had in the past.
That's the model we're moving to. It's built on modular building blocks and offering tons of tools and software people can take advantage of.